GENEVA, SWITZERLAND — Whether it is at home or in government, resource allocation is a tricky and sensitive matter that ticks off different people.
Not only is does it drive or limit what the recipient can and cannot do, it implies what is or what is not important to the one holding the purse strings.
The matter becomes even more iffy if you know that what is inside that purse is basically a huge chunk of what you slaved for day in and day out.
After all, the amount sliced from your income tax is no joke. People do not vomit or shit cash. Money, as they say, doesn’t grow on trees or fall from the sky or sprout like mushrooms. It is something that most people work for, and therefore, it is something that makes people angry when they feel that it is not being used well.
To be very clear about it, this is not a post about which government agency is doing its job or which one sucks. That’s a topic I’ll leave for other people to talk about in a sane, logical, and tasteful manner.
What I want to look into are the psychological forces that drive our policymakers to make decisions on how to divide resources (read: budget) because by understanding what drives our policymakers to allocate scarce resources will tell you what is really important to your Representatives.
Resources will always be wanting, given everyone’s unlimited and insatiable needs and wants.
In economics, the problem of allocating scarce resources creates enemies or friends. Even if we use a benchmark such as “efficient” allocation of resources — which economists use as a criteria — does not reflect what people want.
Many laboratory and field experiments using the Ultimatum Game, for example, have shown that people prefer “fair” allocation over “efficient” allocation.
However, in the case of government agencies, there is a minimum threshold by which government agencies can operate.
Allocating, let’s say for example, US$ 20 (P1,000) on a government agency expected to fulfill a set of mandates only renders it useless and immobile. The weekly budget of the sari-sari store owner to replenish his supplies is even more than that! Just think how far an annual budget of US$20 will get a government agency.
A paper by Corrigan & Watson (2003) called Factors that Explain How Policymakers Distribute Resources to Mental Health Services is an interesting, no-BS take on the issue.
The paper suggests that although decisions on who gets how much are affected by factors such as the policymakers’ perceptions of “scarcity of resources, effectiveness of specific programs, needs of people who have problems that are served by these programs, the extent of personal responsibility of these problems,” ultimately, the decision on how much resources must be allocated to a particular program is influenced by political ideology.
While political beliefs are not the end-all be-all in decision making, it plays a pivotal role in sealing the deal.
Resources, be it in social, psychological or economic terms can be used to reward or punish.
In this case, sometimes some people are driven by an urge to punish those whom they believe are responsible for making things hard for them by withholding scarce resources.
However, all is not lost. Remember that politicians are very sensitive about how their constituents perceive them, especially if the peer pressure is so great that it threatens their prospects of reelection.
Another factor that strongly influences policymakers’ decision- making is how strongly they feel that their constituents will closely monitor their decisions, and hold them accountable for such decisions.
So what do policymakers hope to gain by slashing a government agency’s budget to an amount that can’t even fill a piggy bank? Was it to punish an agency for alleged abysmal performance? Or did it come with the hopes of surfing the tidal waves of popular support? You be the judge.
What happens during discussions on resource allocations is basically an interplay of psychological forces between politicians and the public, as well as an interplay between incentives. The interaction between psychology and incentives matter a lot.
Understanding the psychological forces affecting the way your policymakers make decisions about what to do with your precious taxes will go a long way.
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